CRITICAL SUCCESS FACTORS AND ORGANIZATIONAL PERFORMANCE OF INDIGENOUS THIRD PARTY LOGISTIC BUSINESSES IN TRANSPORT SECTOR IN KENYA
The main objective of this study was to investigate critical success factors and organization performance of indigenous third party logistic businesses in the transport sector in Kenya. The third party logistics industry has been constantly changing due to global industry consolidation, technology integration, industry specialization, and industry alliance networks. Literature presents five different critical success factors for creating organizational performance. These are operation cost, innovation, resilience, quality service and relationship management. This paper was to analyze from the retailers’ perspective, how factors of third party logistics providers could meet the customers’ needs better and create organization Performance in the third party logistics market. The empirical data was collected through Questionnaires and interview schedules. In total 181 Logistic firms were to take part in the survey, Census enquiry was used to get the sample where operations managers in the indigenous third party logistic companies were respondents who were interviewed. The collected data was analyzed using descriptive research design an exploratory factor analysis, multi- collinerity test, inferential statistical analyses and linear regression tests was carried out for each variable in the study. Data analysis was done using SPSS to generate quantitative reports through tabulations, percentages, and measures of central tendency. Validity and reliability was tested using a pilot study.
Key Words: Critical Success Factors, Logistics Businesses, Operation Cost
Abdullah, H. H., Mohamed, Z. A., Othman, R., &Uli, J. (2009). The effect of Sourcing Strategies on the Relationship Between Competitive Strategy and Firm Performance. International Review of Business Research Papers , 5 (3), 346-362.
Adèr, H., Mellenbergh, G. & Hand D. (2008).Advising on research methods: A consultant's companion. Belgium. Johannes van Kessel Publishing.
Anderson, E. J., Coltman, T., Devinney, T. M., & Keating, B. (2011). What drives the choice of a third-party logistics provider?. Journal of Supply Chain Management, 47(2), 97-115.
Agarwal, B.L. (2009). Basic Statistics, 5th Edition. New Delhi: New Age International.
Alston, J. P. (1989). Wa, guanxi, and inwha: Managerial principles in Japan, China and Korea, Business Horizons, 32, March-April, 26-31.
Armstrong & Associates (2012) “Prospects of 3PL market in 2013 look promising,”
http://www.logisticsmgmt.com/article/prospects for 3pl market in 2013_look_ promising, assessed November 18, 2013.
Arrow, K.J. (1974). The limits of organization (Fels lectures on public policy analysis).1st Edition. Norton, New York.
Barzel, Y. (1982). Measurement costs and the organization of markets. Journal of Law and Economics, 25, 27-48.
Bailey, R.A. (2008). Design of Two-Phase Experiments. DEMA, Isaac Newton Institute
Beamon B. M. (1999). Measuring supply chain performance, International Journal of Operations and Production Management, 19(3), 275-292.
Berglund, M., Laarhoven, P., Sharman, G., &Wandel, S. (1999). Third-party logistics: Is there a future?.International Journal of Logistics Management, 10(1), 59.
Berglund, M. P., Laarhoven, G. S., and Wendel, S. (1999). Third-party logistics: Is there a future? International Journal of Logistics Management, 10(1), 59-70.
Black, K. (2004). Business Statistics for Contemporary Decision Making.4th ed. Wiley-India.
Bowen, D. E., Sieh, C., and Schneider, B., (1989). A framework for analyzing customer service orientations in manufacturing, Academy of Management Review, 14, (1), 75-95.
Brown, B., and Perry, S. (1994). Removing the financial performance halo from Fortune’s “most admired” companies, Academy of Management Journal, 37, 1347-1359.
Buttle, F. (1996). "SERVQUAL: review, critique, research agenda," European Journal of Marketing, Vol.30, Issue 1, pp.8–31
Cann, C. W. (1995). Post purchase marketing and relationship management, Ebrahimpour, M., Northeast Decision Institute 1995 Proceedings, 338-340.
Caputo, A. C., Cucchiella, F., Fratocchi, L., Pelagagge, P. M., and Scacchia, F. (2004). Analysis and evaluation of e-supply chain performances, Industrial Management and Data System, 104(7), 546-557.
Carr, A. S., and Person, J. N. (1999).Strategically managed buyer-seller relationships and performance outcomes, Journal of Operations Management, 17(5), 497-519.
Carter, S. M., and Deephouse, D. L. (1999). “Though talk” and “smoothing speech”: Management reputations for being tough and for being good, Corporate Reputation Review, 2, 308-332.
Castillo, J.J.(2009). Convenience Sampling. Available online at http://www.experiment-resources.com/convenience-sampling.html retrieved on 13 September 2011.
Cater, S. M., and Dukerich, J. M. (1998). Corporate responses to changes in reputation, Corporate Reputation Review, 1, 250-270.
Chatterjee, D., Segars, A.H. and Watson, R.T. (2006).Realizing the promise of e-business: developing and leveraging electronic partnering options. California Management Review, 48 (4), 60-83.
Chen, H., Tian, Y., Ellinger, A. E., & Daugherty, P. J. (2010).Managing Logistics Outsourcing Relationships: An Empirical Investigation in China. Journal of Business Logistics , 31 (2), 279 - 299.
Coase, R. (1937). The Nature of the Firm.Economica, 4, 386-405.
Creswell, J. W.(2008). Educational Research.3rd Edition. Upper Saddle River, New Jersey. Pearson Education, Inc.
Creswell, J.W. (2003). Research Design: Qualitative, Quantitative, Mixed methods Approaches. (2nd edn.). London: Sage Publications.
Christiansson, H. & Sporrek, K. (2003). The Role of the Internet as an SST - On-Line Booking Service. Goteborg University ISSN 1403-851X. Elanders Novum.
Dayahka H. (2007). Meaning of Empirical Evidence. Available online http://www.helium.com/items/152345-the-meaning-of-empirical-evidence Accessed on 18th August 2011
Davis, G. F. and J. A. Cobb (2010) "Resource dependence theory: Past and future." Stanford's organization theory renaissance, 1970-2000: 21-42. Bingley, NY: Emerald Group.
Dirk, L. (1999). A measure of originality: The elements of science. Social Studies in Science, 29 (5), 765-776
Dixey, L. (2002) Evaluation of the Institutional Strengthening Programme of the Heritage Trails Project for Heritage Trails Project Staff and Partners: the Uganda Community Ttransport Association and the Kabaka Foundation, Heritage
Drees, J. M. and P.P.M.A.R. Heugens (2013). "Synthesizing and Extending Resource Dependence Theory: A Meta-Analysis." Journal of Management, 39: 1666-1698.
Dudgeon, R.C. (2008).The meaning of Empirical Evidence. Available online
http://www.helium.com/items/769638-the-meaning-of-empirical-evidence Retrieved on 13 September 2011.
Dwyer, F. R, Schurr, P. H., and Oh, S., (1987). Developing buyer-seller relationships, Journal of Marketing, 51, 11-27.
Ellram, L. M., and Cooper, M. C. (1990). Supply chain management partnerships, and the shipper-third party relationship, International Journal of Logistics Management, 1(2), 1-10.
Elmuti, D. (2002). The perceived impact of supply chain management on organizational effectiveness, Journal of Supply Chain Management, 2002(2), 49-57.
Ellram, L. M. (1990). The supplier selection decision in strategic partnerships, Journal of Purchasing and Materials Management, 26(4), 8-14.
Emerson, Richard M. 1962. Power-Dependence Relations. American Sociological Review 27(1): 31–41.
Evangelista, P., & Sweeney, E. (2006). Technology usage in the supply chain: The case of small 3PLs. International Journal of Logistics Management, 17(1), 55-74.
Fakhar, A. (2008). Factors Affecting Transport, Transport Potential and Strategies for Development as an Industry in Pakistan. University of Gavle, Pakistan.
Fernie, J., & Sparks, L. 2004. Logistics and Retail Management. Insights into Current Practice and Trends from Leading Experts ( 2nd ed.). London: Kogan Page Limited.
Fombrun, C., and Shanley, M. (1990). What’s in a name: Reputation building and corporate strategy, Academy of Management Journal, 33, 233-258.
Fugate, B. S., Mentzer, J. T. and Stank, T. P. (2010). Logistics Performance: Efficiency, Effectiveness, and Differentiation. Journal of Business Logistics31: 43-61.
Gale, B.T. (1994). Managing Customer.Value, Free Press New York, N.Y.
Gall, M. D., Gall, J. P., & Borg, W. R. (2007).Educational Research, 8th Edition. Boston: Pearson Education, Inc.
Geyskens, I., Steenkamp, J. and Kumar, N. (2006). Make, buy, or ally: A transaction cost theory metaanalysis, Academy of Management Journal, 49 (3), 519-543.
Gillham, B. (2008). Developing a Questionnaire.3rd Edition. Continuum International Publishing Group Ltd. ISBN 9780826496317
Glassberg, B. C. and Merhout, J. W. (2007). Electronic markets hypothesis redux: where are we now? Communication of the ACM 50(2), 51-55.
Goodwin, C. J. (2005). Research in Psychology: Methods and Design. USA: John Wiley & Sons, Inc.
Guandlach, G. T., Achrol, R. S., and Mentzer, J. T. (1995).The structure of commitment in exchanges, Journal of Marketing, 59(1), 78-92.
Gupta, A., Wilemon, K., and David, L. (1990).Accelerating the development of technology-based new products, California Management Review, 32(4), 24-44.
Greener, S. (2008).Business Research Methods.ISBN 978-87-7681-421-2.Ventus Publishing ApS
Gwinner, K. P., Gremler, D. D., and Bitner, M. J. (1998). Relational benefits in service industries: The customer’s perspectives, Journal of the Academy of Marketing Science, 26(2), 101-114.
Hair, J.F., Anderson, R.E., Tatham, R.L. & Black, W.C. 1998.Multivariate Data Analysis.5th Ed. New Jersey: Prentice Hall.
Han, S. (1993). Buyer-supplier relationships today, Industrial Marketing Management, 22(4), 331-38.
Heide, J. B., and Miner, A. S., (1992). The shadow of the future: Effects of anticipated interaction and frequency of contact on buyer-seller cooperation, Academy of Management, 35(6), 266-291.
Helper, S. (1987). Supplier Relations and Innovation: Theory and Application tithe U.S. Auto Industry, Ph.D. thesis, Harvard:
Hillman, A. J., Withers, M. C. and B. J. Collins (2009). "Resource dependence theory: A review." Journal of Management 35: 1404-1427.
Hirschman, A. (1970). Exit, Voice, and Loyalty.Cambridge MA, Harvard University Press.
Horrobin, D.F. (1990). The philosophical basis of peer review and the suppression of innovation. Journal of the American Medical Association, 16, 1438-1441.
Hofer, A. R., Knemeyer, A. M., &Dresner, M. E. (2009).Antecedents and dimensions of customer partnering behavior in logistics outsourcing relationships. Journal for Business Logistics , 30 (2), 141-59.
Ittner, C. D., and Larcker, D. F. (1997).Product development cycle time and organization performance, Journal of Marketing Research, 34(4), 13-23.
Jharkharia, S., & Shankar, R. (2007). Selection of logistics service provider: An analytic network process (ANP) approach. Omega, 35, 274 – 289.
Josmani, D.S.B.A. (2007). Selection Criteria for Choosing Domestic Packages Transport in Malaysia. University of Technology in Malaysia.
Kenya Service Sub-committee (2002).Developing Kenya into a global trade hub, Service Sub-committee Working Group in Trading, September 2002.
Knemeyer, M. A., & Murphy, P. R. (2005). Exploring The Potential Impact of Relationship Characteristics and customer Attributes on the Outcomes of Third-Party Logistics Arrangements. Transportation Journal , 44 (1), 5-19.
Koh, S.C.L, Demirbag,M., Bayraktar,E., Tatoglu, E. and Zaim, S. (2007). The impact of supply chain management practices on performance of SMEs.Industrial Management & Data Systems 107: 103 – 124.
Kerlinger, F.N. & Lee, H.B. 2000.Foundations of behavioral research. 4th Ed. Sydney: Harcourt College Publishers.
Kessler, E. H. and Chakrabarti, A. K. (1996). Innovation speed: A conceptual model of context, antecedents, and outcomes, Academy of Management Review, 21(4), 1143-1191.
King'oriah, G. K. (2004). Fundamentals of Applied Statistics. Nairobi: The JomoKenyatta Foundation.
Klein, B., Crawford, R.G. and Alchian, A.A. (1978).Vertical Integration, Appropriable Rents, and the Competitive Contracting Process.Journal of Law and Economics, 21(2), 297-326Kothari, C.R. (2004).Research Methodology Methods & Techniques 2nd Edition. New Delhi, India. New Age International (P) Limited.
Lai, K. H., Cheng, T. C. E., and Yeung, A. C. L. (2005). Relationship stability and supplier commitment to quality, International Journal of Production Economics, 96, 397-410.
Lai, K. H., Ngai, E. W. T., and Cheng, T. C. E. (2004).An empirical study of supply chain performance in transport logistics, International Journal of Production Economics, 87, 321-331.
Lai, K. H., Ngai, E. W. T., and Cheng, T. C. E. (2002). Measures for evaluating supply chain performance in transport logistics, Transportation Research Part E: Logistics and Transportation Review, 38(6), 439-456.
Larson, P. D. (1994). An empirical study of inter-organizational functional integration and total costs, Journal of Business Logistics, 15(1), 153-169.
Leary, M.R. (2001), Introduction to Behavioral Research Methods (3rd Ed.)Allyn&Bacon, Boston, USA.
Lewis, I., and Talaleyevsky, A. (2000). Third-party logistics:
Leveraging information technology, Journal of Business Logistics, 21(2), 173-185.
Lieb, R. C., and Miller, J. (2002). The use of third-party logistics services by large US manufacturers: The 2000 survey, International Journal of Logistics: Research and Applications, 5(1), 1-12.
Lieb, R. C., & Lieb, K. J. (2010).The North American Third-Party Logistics Industry in 2008- The Provider CEO Perspective. Transportation Journal , 49-65 (2), 53.
Lieb, R. (2008). The North American Third-Party Logistics Industry in 2007: The Provider CEO perspective. Transportation Journal , 47 (2), 39-53.
Lieb, R., & Butner, K. (2007). The North American Third-Party Logistics Industry in 2006: The Provider CEO perspective. Transportation Journal , 46 (3), 40-52.
Lieb, R. C., & Bentz, B. A. (2005). The use of third-party logistics services by large American manufacturers: The 2004 survey. Transportation Journal, 44(2), 24-33.
Lieb, R. C. (1992). The use of third party logistics services by large American manufacturers, Journal of Business Logistics, 13(2), 29-42.
Luo, Y. (1997). Guanxi and performance of foreign-invested enterprises in China: An empirical inquiry, Management International Review, 37(1), 51-70. 173.
Luo, Y., and Chen, M. (1997). Does Guanxi influence firm performance? Asia Pacific Journal of Marketing, 14(1), 1-16.
McDougal, S., and Smith, J. (1999). Wake up your product development: Bringing sales into the new product process may improve success rates, Marketing Management, 8(2), 24-30.
McGinnis, M. A. (1990). The relative importance of cost and service in freight transportation choice: before and after deregulation. Transportation Journal, 30(1), 12-19.
Mello, J. E., Stank, T. P., &Esper, T. L. (2008). A model of Logistics Outsourcing Strategy. Transportation Journal , 47 (4), 5-25.
Meixell, M. J., & Norbis, M. (2008).A review of the transportation mode choice and carrier selection literature. The International Journal of Logistics Management.19(2), 183-211
Mentzer, J. T., Foggin, J. H., and Golicic, S. L. (2000). Collaboration, Supply chain Management Review, 4(4), 52-60.
Millan, A. & Esteban, A. (2004). Development of a multiple-item scale for measuring customer satisfaction in travel agencies services. “Tourism management”, n. 25, 2004, pp 533-546.
Ming’ala, J.O.(2002). Data analysis using SPSS. Nairobi
Moorman, C., Zaltman, G., and Deshpande, R. (1993). Relationships between providers and users of marketing research: The dynamics of trust within and between organizations, Journal of Marketing Research, 29, 314-329.
Monczka, R., Trent, R., &Handfield, R. (2005).Purchasing and Supply Chain Management. Mason, OH: Thomson South-Western.
Morgan, R. M., and Hunt, S. D. (1994), The commitment-trust theory of relationship marketing, Journal of Marketing, 58, 20-38.
Mugenda, O. M. & Mugenda, A. G. (2003).Research Methods: Quantitative and Qualitative Approaches, Acts Press, Nairobi-Kenya.
Neuman, W.L (2000). Social Research Methods: Qualitative and Quantitative Approaches. Boston: Allyn and Bacon Publishers.
New York (1979). Transaction-Cost Economics: The Governance of Contractual Relations. Journal of Law and Economics, 22(2), 233-261.
Noordewier, T. G., John, G., and Nevin, J. R. (1990).Performance outcomes of purchasing arrangements in industrial buyer-vendor relationships, Journal of Marketing, 54(4), 80-93.
Nyaga, N. 2009). Kenya: Tourism Proves Resilient in times of Trouble. Transport Review, Nairobi.
Parasuraman, A., Berry, L. L., and Zeithaml, V. A. (1991). Refinement and reassessment of the SERVQUAL scale, Journal of Retailing, 67(4), 420-450.
Parasuraman, A., Zeithaml, V.A. & Berry, L.L. (1985). "A conceptual model of service quality and its implication", Journal of Marketing , Vol. 49, Fall, pp. 41-
Pearce, J. A., and Robinson, R. B. (2000).Cultivating guanxi as a foreign investor strategy, Business Horizons, 1/2, 31-38.
Pfeffer, J. and Salancik, G. R. (1978), The External Control of Organizations: A Resource Dependence Perspective, Harper & Row, New York.
Porter, M.E. (1990). The Competitive Advantage of Nation. New York, Free Press.
Power, D., Bhakoo, V., & Sharafali, M. (2007).Adding Value Through Outsourcing: Contribution of 3PL services to Customer Performance.Management Research News , 30 (3), pp. 228 -235.
Quinn, F. J. (1998). Building a world-class supply chain: Supply chain. Logistics Management Distribution Report, 37(6), 37-41.
(Argue 2013)Success of tourism industry in Kenya. Prime journal of social science 03/2013;Vol 2 (issue 2): 227-236
Rao, H. (1994). The social construction of reputation: Certification contests, legitimation, and the survival of organizations in the American automobile industry: 1895 – 1912, Strategic Management Journal, 15, 29-44.
Rao, K., & Young, R. R. (1994). Global Supply Chains: Factors influencing outsourcing of logistics functions. International Journal of Physical Distribution & Logistics Management, 24 (6), 11-19.
Rindfleisch, A. and Heide, J.B. (1997). Transaction Cost Analysis: Past, Present, and Future Applications. Journal of Marketing, 61(4), 30-54. Organizational mortality in the U.S. trucking industry. Strategic Management Journal, 18, 31-52.
Simon, H.A. (1957). Models of man: social and rational. Wiley, New York.
Russell, R., & Taylor, B. (2003). Operations Management. Upper Saddle River, NJ: Prentice-Hall.
Sako, M. (1992). Prices, Quality, and Trust: Inter-firm Relations in Britain and Japan. Cambridge: Cambridge University Press.
Saunders, M., Lewis, P. & Thornhill, A. (2009).Research methods for business students. 4th ed. London: Prentice Hall.
Schilling, Melissa, A., Hill, and Charles, W. L. (1998). Management the new product development process: Strategic imperatives, Academy of Management Executive, 12(3), 67-81.
Schewarz, N. & Sudman, S. (1995). Answering questions; Methodology for determining cognitive and communicative processes in a survey research. San Franscisco: Joossey-Bay Publishers.
Schwab, D. P. (2005).Research Methods for Organisational Studies - 2nd Edition. New Jersey: Lawrence Erbaum Associates, Publishers.
Sekaran, U. (2003) Research Methods for Business: A skill Building Approach. 4thEdition Illinois, USA. John Wiley & Sons, Inc.
Selviaridis, K., & Spring, M. (2007). Third party logistics: a literature review and re-search agenda. The International Journal of Logistics Management, 18(1), 125-150.
Selladurai, R. (2002). An organizational profitability, productivity performance (PPP) model: Go beyond TQM and BPR, Total Quality Management, 13(5), 613-619.
Selviaridis, K., & Spring, M. (2007). Third party logistics: a literature review and re-search agenda. The International Journal of Logistics Management, 18(1), 125-150.
Sharif, S. P. and Yeoh, K. K. (2014). "Independent Directors’ Resource Provision Capability in Publicly-listed Companies in Malaysia." Corporate Ownership and Control 11(3): 113-121.
Skjoett-Larsen, T. (2000).Third party logistics – From an Inter-organizational point of view, International Journal of Physical Distribution and Logistics Management, 30(2), 112-117.
Stalk, G., and Hunt, T. M. (1990). Competing Against Time. New York: Free Press.
Stank, T. P., Goldsby, T. J., Vickery, S. K., and Savitskie, K. (2003). Logistics service performance: Estimating its influence on market share, Journal of Business Logistics, 24(1), 27-55.
Stigler, G.J. (1961). The economics of information. Journal of Political Economy, 69 (3), 213-225.
TDC (2002). Enhancing Supply Chain Efficiency: Transportation and Logistics. Hong Kong: Hong Kong Trade Development Council.
Töyli, J., Häkkinen, L., Ojala, L. and Naula, T. (2008). Logistics and financial performance: An analysis of 424 Finnish small and medium-sized enterprises. International Journal of Physical Distribution & Logistics Management 38: 57-80.
Thompson, J. D. (1967), Organizations in Action, McGraw Hill, New York.
Vaidyanathan, G. (2005). A Framework for Evaluating Third-Party Logistics.Commu-nications of the ACM, 48(1), 89-94.
Van Laarhoven, P., Berglund, M. & Peters, M. (2000) Third party logistics in Europe – five years later, International Journal of Physical Distribution &Logistics Management, Vol. 30, No. (5), pp. 425-42.
Walton, C. (2010). 4PL Versus 3PL. Motor Transport , pp. 10-11.
Wireman, W. & Jars, S. G. (2009). Research Methods in Education.9th Edition. New York. Pearson Education Incl.
Wieland, J. (2005). Corporate Governance, Values Management, and Standards: A European Perspective, Business Society, 44, 74-93.
Williamson, O.E. (1975). Markets and hierarchies: analysis and antitrust implications. Free Press,
Williamson, (1981). The Economics of Organization: The Transaction Cost Approach. The American Journal of Sociology, 87(3), 548-577.
Williamson,. (1985). The economic institutions of capitalism: firms, markets, relational contracting. Free Press, New York.
Williamson,. (1986). Economic Organization. Firms, Markets and Policy Control. New York University Press, Washington Square, New York. Williamson,. (1993). The economic analysis of institutions and organizations - In general and with respect to country studies. OECD, Paris.
Williamson, (1996).The mechanisms of governance. Oxford University Press, New York.
Wong, Y. H. (1997). A study of buyer-seller relationship (guanxi) in import-export business: Customer perceived relationship quality, Proceedings of2nd International Conference on Quality and Reliability, 357-364.
Woodruff, R. B. (1997). Customer value: The next source for competitive advantage, Journal of the Academy of Marketing Sciences, 25(2), 139-153.
Wulfraat, M. (2012). Are Grocery Retailers Increasingly Outsourcing Distribution Op-erations to 3PLs? MWPVL International Inc. Retrieved March 14, 2012, from http://www.mwpvl.com /html/retail _3pl_outsourcing.html
Xin, K. R., and Pearce J. L. (1996).Guanxi: Connections as substitutes for formal institutional support, Academy of Management Journal, 39(6), 1641-1658.
Zeithaml, A., Parasuraman, A., and Berry, L. L. (1988). SERVQUAL: A multiple item scale for measuring perceptions of service quality, Journal of Retailing, 64(1), 12-40.
Zeithaml, V. A., Berry, L., and Parasuraman, A. (1996).The behavioral consequence of service quality, Journal of Marketing, 60 (2), 31-46.
Zikmund, G.W., Babin J.B., Carr, J.C & Griffin M. (2010).Business Research Methods, 8th Edition, Oklahoma: ISBN-10: 1439080674 ISBN-13: 9781439080672.
- There are currently no refbacks.